home folder encryption
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Solved by Eigenvektor,
There's a lot of context missing to your question, like what type of encryption you've set up in the first place.
When you use disk encryption, data on the disk generally stays encrypted all the time.
The decryption key is unlocked and loaded into memory when you sign in. That allows the OS to transparently decrypt data on the fly. Signing out removes the key from memory.
The data is only in a decrypted state while loaded into memory, the disk itself is never decrypted (otherwise, that would take a long time, each time you sign in/out)

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